Improvements in compliance programs according to the OECD

August 8, 2023

Founded in 1961 and headquartered in Paris, the Organisation for Economic Co-operation and Development (OECD) economic organization composed of 38 member countries. Its goal is to stimulate global economic progress and facilitate world trade.

Currently, the following countries are OECD members: Germany, Australia, Austria, Belgium, Canada, Chile, Colombia, South Korea, Costa Rica, Denmark, Slovakia, Slovenia, Spain, United States, Estonia, Finland, France, Greece, Netherlands, Hungary, Ireland, Iceland, Israel, Italy, Japan, Latvia, Lithuania, Luxembourg, Mexico, Norway, New Zealand, Poland, Portugal, United Kingdom, Czech Republic, Sweden, Switzerland, and Turkey.

Brazil notably is not part of this select group, although political reasons are an important variable that still prevent its entry. However, the OECD establishes guidelines to be followed by member countries. This, in turn, encourages similar standards to be required of those with whom they do business.

The OECD published the 2021 Anti-Bribery Recommendation to improve the fight against bribery of foreign public officials in international commercial transactions. In summary, the following highlights are listed below:

HIGHLIGHTS FROM THE 2021 OECD ANTI-CORRUPTION RECOMMENDATION

1. Require that member countries encourage the development of compliance programs, both in the context of its application and in the participation of companies in government purchases or when receiving other public benefits.

2. Require a level playing field between state-owned companies and private companies, subjecting state-owned companies to the same compliance expectations and standards than private ones.

3. Ask countries to remove obstacles to effective due diligence and other compliance practices presented by data protection regimes.

4. Emphasis on accounting standards and internal auditing.

5. Encourage reporting and protection of whistleblowers.

6. Improve and update OECD guidance on internal controls, ethics and compliance, guidelines which influence standards imposed by the United States and other law enforcement authorities in countries that participate in the OECD and are party to the Anti-Bribery Convention.

The document titled Annex II –  Good Practice Guidance on Internal Controls, Ethics and Compliance focuses on companies, business organizations, and professional associations. It is divided into two distinct sections and has been substantially updated, as can be seen in the table below:

TOPIC

IMPROVEMENTS MADE TO ANNEX II

Commitment with Compliance

A.1. – There must be unconditional support and commitment from the board or corresponding managers (in addition to the general manager),view to implementing a culture of ethics and compliance.

A.16. – Establish a new expectation in the external communication of the company's commitment with compliance.

Policies and Procedures

A.2. – Recommend that companies' anti-corruption policies must be easily accessible to employees, relevant third parties, and subsidiaries and should be translated into the language of the country, where necessary.

A.5. – Expands the list of areas that must be covered by the compliance policies and procedures: conflicts of interest, recruitment and selection processes, risks associated with the use of third parties, and clear processes for participating in bidding processes.

Internal Monitoring and Autonomy

A.4. – Emphasizes that compliance officers responsible for monitoring compliance programs must have an appropriate level of experience and qualifications, as well as access to relevant data sources.

Relationship with Third Parties

A.6. – (i) there must be continuous third-party monitoring, (ii) adds a new element with respect to mechanisms to ensure that contract terms describe in detail the services to be provided, which payment terms are appropriate, that the object of the contract is effectively performed, and the payments, in return, are made, (iii) adds a new element to ensure the company's right to audit third parties and to effectively exercise said right, and (iv) adds a new element with respect to the establishment of adequate mechanisms to address corruption incidents abroad by contracted third parties, for example, termination of contract.

Internal Reporting, Investigation, and Remediation

A.8. – Adds a new element with regard to internal controls to identify patterns that indicate corruption abroad, including the use of innovative technologies.

A.11. – Recommends that measures to address suspected corruption cases abroad must also include (i) processes to identify, investigate, and report misconduct and effectively utilize the necessary resources to enforce the law and (ii) remediation (including analysis of the situation giving rise to the issue and identified weaknesses).

A.13. – Clarifies that internal reporting mechanisms must be confidential, anonymity being possible, and provide visible and accessible channels for reporting misconduct.

Training

A.9. – Adds a new element aimed at ensuring documented and periodic training for third parties regarding the company's compliance and anti-bribery program.

A.12. and A.13. – Adds new expectations to ensure that whistleblowers do not suffer retaliations.

Incentives and Disciplinary Measures

A.10. – Encourages appropriate incentives for meeting compliance standards, including ethics and compliance in human resources processes.

A.11. – Clarifies that disciplinary measures must be consistent, appropriate, and properly communicated to ensure employee awareness.

Periodic Reviews, Monitoring, and Testing

A.14. – Clarifies that periodic tests and reviews must be regularly conducted and target specific developments, operational, and structural changes, monitoring and auditing results and “lessons learned” from potential misconduct occurring in the company itself, as well as from other companies facing similar risks.

Mergers and acquisitions

A.15. – Adds a new element providing for the absolute necessity of risk-based due diligences prior to mergers and acquisitions, and incorporation of the new company into the compliance program and internal controls, carrying out all necessary training and audits.

It is important to note that all recommendations will be observed within the monitoring program carried out by the OECD Anti-Bribery Working Group.

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Improvements in compliance programs according to the OECD

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Founded in 1961 and headquartered in Paris, the Organisation for Economic Co-operation and Development (OECD) economic organization composed of 38 member countries. Its goal is to stimulate global economic progress and facilitate world trade.

Currently, the following countries are OECD members: Germany, Australia, Austria, Belgium, Canada, Chile, Colombia, South Korea, Costa Rica, Denmark, Slovakia, Slovenia, Spain, United States, Estonia, Finland, France, Greece, Netherlands, Hungary, Ireland, Iceland, Israel, Italy, Japan, Latvia, Lithuania, Luxembourg, Mexico, Norway, New Zealand, Poland, Portugal, United Kingdom, Czech Republic, Sweden, Switzerland, and Turkey.

Brazil notably is not part of this select group, although political reasons are an important variable that still prevent its entry. However, the OECD establishes guidelines to be followed by member countries. This, in turn, encourages similar standards to be required of those with whom they do business.

The OECD published the 2021 Anti-Bribery Recommendation to improve the fight against bribery of foreign public officials in international commercial transactions. In summary, the following highlights are listed below:

HIGHLIGHTS FROM THE 2021 OECD ANTI-CORRUPTION RECOMMENDATION

1. Require that member countries encourage the development of compliance programs, both in the context of its application and in the participation of companies in government purchases or when receiving other public benefits.

2. Require a level playing field between state-owned companies and private companies, subjecting state-owned companies to the same compliance expectations and standards than private ones.

3. Ask countries to remove obstacles to effective due diligence and other compliance practices presented by data protection regimes.

4. Emphasis on accounting standards and internal auditing.

5. Encourage reporting and protection of whistleblowers.

6. Improve and update OECD guidance on internal controls, ethics and compliance, guidelines which influence standards imposed by the United States and other law enforcement authorities in countries that participate in the OECD and are party to the Anti-Bribery Convention.

The document titled Annex II –  Good Practice Guidance on Internal Controls, Ethics and Compliance focuses on companies, business organizations, and professional associations. It is divided into two distinct sections and has been substantially updated, as can be seen in the table below:

TOPIC

IMPROVEMENTS MADE TO ANNEX II

Commitment with Compliance

A.1. – There must be unconditional support and commitment from the board or corresponding managers (in addition to the general manager),view to implementing a culture of ethics and compliance.

A.16. – Establish a new expectation in the external communication of the company's commitment with compliance.

Policies and Procedures

A.2. – Recommend that companies' anti-corruption policies must be easily accessible to employees, relevant third parties, and subsidiaries and should be translated into the language of the country, where necessary.

A.5. – Expands the list of areas that must be covered by the compliance policies and procedures: conflicts of interest, recruitment and selection processes, risks associated with the use of third parties, and clear processes for participating in bidding processes.

Internal Monitoring and Autonomy

A.4. – Emphasizes that compliance officers responsible for monitoring compliance programs must have an appropriate level of experience and qualifications, as well as access to relevant data sources.

Relationship with Third Parties

A.6. – (i) there must be continuous third-party monitoring, (ii) adds a new element with respect to mechanisms to ensure that contract terms describe in detail the services to be provided, which payment terms are appropriate, that the object of the contract is effectively performed, and the payments, in return, are made, (iii) adds a new element to ensure the company's right to audit third parties and to effectively exercise said right, and (iv) adds a new element with respect to the establishment of adequate mechanisms to address corruption incidents abroad by contracted third parties, for example, termination of contract.

Internal Reporting, Investigation, and Remediation

A.8. – Adds a new element with regard to internal controls to identify patterns that indicate corruption abroad, including the use of innovative technologies.

A.11. – Recommends that measures to address suspected corruption cases abroad must also include (i) processes to identify, investigate, and report misconduct and effectively utilize the necessary resources to enforce the law and (ii) remediation (including analysis of the situation giving rise to the issue and identified weaknesses).

A.13. – Clarifies that internal reporting mechanisms must be confidential, anonymity being possible, and provide visible and accessible channels for reporting misconduct.

Training

A.9. – Adds a new element aimed at ensuring documented and periodic training for third parties regarding the company's compliance and anti-bribery program.

A.12. and A.13. – Adds new expectations to ensure that whistleblowers do not suffer retaliations.

Incentives and Disciplinary Measures

A.10. – Encourages appropriate incentives for meeting compliance standards, including ethics and compliance in human resources processes.

A.11. – Clarifies that disciplinary measures must be consistent, appropriate, and properly communicated to ensure employee awareness.

Periodic Reviews, Monitoring, and Testing

A.14. – Clarifies that periodic tests and reviews must be regularly conducted and target specific developments, operational, and structural changes, monitoring and auditing results and “lessons learned” from potential misconduct occurring in the company itself, as well as from other companies facing similar risks.

Mergers and acquisitions

A.15. – Adds a new element providing for the absolute necessity of risk-based due diligences prior to mergers and acquisitions, and incorporation of the new company into the compliance program and internal controls, carrying out all necessary training and audits.

It is important to note that all recommendations will be observed within the monitoring program carried out by the OECD Anti-Bribery Working Group.

No items found.